Credit Suisse Ramps Up Efforts to Strengthen Finances
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Credit Suisse surged 5.4% on Friday, after the embattled Swiss lender said it would buy back up to 3 billion Swiss francs ($3 billion) of senior debt securities. Credit Suisse Group AG has intensified efforts to sell or shrink holdings in key businesses in recent days, part of a planned restructuring to remake the bank, people familiar with the matter said. Around 10 bidders have submitted offers for the bank’s securitized products group, some of the people said. The Swiss bank put the business, one of its most profitable, on the block in July, saying it wanted to find an outside investor to conserve capital. The bidders include Sixth Street Partners, which hired one of the group’s senior bankers earlier this year to build a similar business, according to some of the people. Other bidders include buyout firm Centerbridge Partners and Apollo Global Management. Credit Suisse has come under intense pressure in recent days over its plans. The bank’s shares and debt plunged last week, a selloff accelerated by an online frenzy over its condition. The sale of the securitized-products group, the bond buyback and a laundry list of other measures are in preparation for a strategy update on Oct. 27.
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The Switzerland stock market closed notably lower on Friday. The benchmark SMI ended with a loss of 82.56 points or 0.79% at 10,308.57. Logitech ended 5.73% down. Partners Group declined 4%, Geberit ended 3.14% down, and Sonova lost nearly 3%. ABB, Alcon, Givaudan, Richemont, Lonza Group, Sika and Swiss Re shed 1.6 to 2.1%. In the Mid Price Index, AMS plunged 10.52%. VAT Group drifted down 6.45%, Straumann Holding ended 5.3% down, and Tecan Group lost 4.27%. Kuehne & Nagel, Zur Rose, Adecco, Clariant, Schindler Holding, Schindler Ps, Georg Fischer and Ems Chemie Holding also declined sharply. On the economic front, data from the State Secretariat for Economic Affairs, or SECO, showed Switzerland's unemployment rate declined marginally in September, falling to 1.9% in the month from 2% in August. Economists had expected the rate to remain unchanged at 2.0 percent. In the same month last year, the jobless rate was 2.6%.
European shares eased lower on Friday after data from U.S. Labor Department showing a stronger than expected growth in U.S. non-farm payroll in the month of September raised concerns the Fed will continue with its aggressive interest rate hikes in the coming months. Disappointing economic data from the euro area weighed as well on sentiment. The pan European Stoxx 600 drifted down 1.2%. Germany's DAX tumbled 1.6%, France's CAC 40 shed 1.2% and the U.K.'s FTSE 100 edged down 0.1%. In the UK market, Ocado Group dropped 5.78%. JD Sports Fashion, Kingfisher, Taylor Wimpey, Scottish Mortgage, Next, Ashtead Group, Persimmon, Unite Group, RS Group, Barratt Developments, Croda International and Frasers Group lost 3 to 4.2%. Centrica rallied 3.65%. BAE Systems declined 3.47% and Imperial Brands gained about 2.4%. AstraZeneca, BP, IAG, GSK, Shell and British American Tobacco gained 1.4 to 2%. Superdry jumped 11%. The British fashion brand has returned to profit after pandemic induced losses. In Paris, Dassault Systemes tumbled more than 6% and STMicroElectronics drifted down 5.2%, while Legrand, CapGemini, Teleperformance, Schneider Electric, Saint Gobain, Vivendi, LVMH, Michelin, Hermes International, Veolia, Accor and Atos ended lower by 2 to 4%. Renault climbed nearly 5%. WorldLine and Carrefour both gained about 2%. Sanofi, ArcelorMittal and Unibail Rodamco also closed notably higher. In the German market, HelloFresh, Adidas, Puma, Sartorius, Zalando, Vonovia, Deutsche Post, Infineon Technologies, Fresenius, Deutsche Wohnen, Siemens, Daimler and HeidelbergCement lost 2 to 5.3%.
U.S. stocks slid Friday after a relatively strong jobs report, capping a roller-coaster week in which investors built up hopes for easier monetary policy—only to then give them up again. Employers added 263,000 jobs in September, the Labor Department said, slightly less than economists had expected. But the unemployment rate fell to 3.5% from 3.7%, returning to a multidecade low. Ordinarily, evidence of a strong labor market should be good news for investors. But traders seemed to interpret Friday’s data as bad news for the markets, because it suggests that, with the labor market remaining tight, the Fed will have to continue swiftly raising interest rates to rein in inflation. Many investors fear that the Fed’s rate increases will go beyond cooling down the economy and push the U.S. into a recession. The Dow Jones Industrial Average fell 630.15 points, or 2.1%, to 29296.79. The S&P 500 slipped 104.86 points, or 2.8%, to 3639.66. The Nasdaq Composite shed 420.91 points, or 3.8%, to 10652.40. All three indexes remained up for the week, after three straight weekly losses. The Dow advanced 2% for the week, while the S&P 500 climbed 1.5% and the Nasdaq added 0.7%. Stocks fell across the board Friday. All 11 sectors of the S&P 500 were lower, with shares of technology and communication services stocks among the biggest decliners. Facebook parent Meta Platforms, Amazon.com, Apple and Netflix all fell at least 3.7%. Shares of banks and transportation companies, which are sensitive to the economic outlook, also slumped. Many investors fear that the Fed’s rate increases will hurt corporate profits. The KBW Nasdaq Bank Index slid 2.3%. The Dow Jones Transportation Average, which includes shares of airlines, truckers and railroads, lost 2.8%. Elon Musk said Tesla Inc. (-6.3%) plans to deliver its first all-electric semitrailer truck to food and beverage maker PepsiCo Inc. (-0.4%) in December, roughly five years after the billionaire revealed the vehicle. The on-again-off-again deal between Elon Musk and Twitter is somewhere between on and off again. The billionaire on Monday offered to see through his original $44 billion deal to acquire the social-media company. But on Thursday, a Delaware judge presiding over the clash postponed a trial in the matter, giving both sides until Oct. 28 to close the deal -- or schedule a November trial. After being halted in midday trading, Twitter shares surged 22% Tuesday and edged 0,5% lower on Friday.
Stocks in Asia mostly fell, with China’s Shanghai Composite edging 0.4% lower and the Hang Seng in Hong Kong down 2.6% including Li Ning (-4.9 per cent), Sunny Optical Technology (-5.4 per cent) and Sands China (-4.6 per cent). There is no trading in Japan and South Korea due to the holiday.
U.S. Treasury yields rose on Friday, handing the 10-year maturity its longest stretch of weekly yield rises since November 1977, after a healthy U.S. payrolls report fueled expectations for further aggressive rate hikes by the Federal Reserve. The 10-year U.S. Treasury note rose 6 basis points to 3.890%. The 2-year U.S. Treasury note gained 5 basis points to 4.312%.
CS lowers Sika target to CHF 367 (384) - Outperform
Deutsche Bank reduces Novartis target to CHF 70 (75) - Sell
Warburg cuts Zur Rose to CHF 106 (135)- Buy
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